Gold and Silver Surge as Weak US Jobs Report Fuels Fed Rate Cut Speculation - Middle East News 247
July 18, 2024
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Gold and Silver Surge as Weak US Jobs Report Fuels Fed Rate Cut Speculation

APM Capital Market Report

  • Mark Pussard, Head of Risk, APM Capital

Stocks were mixed around the world on Friday as political uncertainty took center-stage. Labour swept to power in a landslide in the UK, change is on the horizon in France, while in the U.S. the once-favoured incumbent hovers on whether or not to continue his candidacy. Here are the closing quotes from the key bourses around the world:

US markets 

Unemployment in the U.S. inched up to 4.1 percent last month, as against the 4 percent expected, according to data published by the U.S. Bureau of Labor Statistics on Friday. Past months were revised downward.

Total nonfarm payroll employment increased by 206,000 in June. Job gains occurred in government, health care, social assistance, and construction. The data failed to dent enthusiasm of investors returning from the 4 July holiday, however, and the major indices all shot higher, with two of the key indices closing at record highs.

The S&P 500 rose by 30.17 points, or 0.54 percent, to finish at 5,567.19, a new all-time high. The broad-market index experienced robust trading volume, with 2.185 billion shares exchanged. Investors saw this as a positive end to a volatile week, as several sectors, particularly technology and consumer discretionary, posted strong performances.

The Dow Jones Industrial Average also saw an uptick, albeit more modest. The blue-chip index gained 67.87 points, or 0.17 percent, closing at 39,375.87. Trading volume for the Dow was 323.324 million shares. Key contributors to this rise included notable gains from industrial and healthcare stocks.

Meanwhile, the tech-heavy NASDAQ Composite surged by 164.46 points, or 0.90 percent, ending the day at 18,352.76, a record high. The NASDAQ saw the highest trading volume among the major indices, with 4.292 billion shares changing hands. The index was buoyed by strong performances from major tech giants and positive news from several high-growth companies.

European market 

The FTSE 100 in London ended the week on a downward note, closing at 8,203.93, a decrease of 37.33 points or 0.45 percent. This decline reflects continued uncertainty and investor caution following the 4 July national election and the stunning return of Labour to power, despite winning only one-third of the national vote. Labour garnered just 34 percent of the tally of votes, while the Conservative Party captured 24 percent.

Germany’s DAX Performance-Index saw a slight uptick Friday, finishing at 18,475.45, up by 24.97 points or 0.14 percent. The index benefited from positive corporate earnings reports and a stable economic outlook.

Asian market

Japan’s Nikkei and broader TOPIX both touched record levels, as did Taiwan’s benchmark, before retreating slightly. Nikkei 225 closed almost unchanged at 40,912.37, a minor decline of 1.28 points. The market remained flat due to mixed economic data and cautious investor sentiment.

Hang Seng Index: The Hang Seng Index in Hong Kong fell sharply, closing at 17,799.61, down by 228.67 points or 1.27 percent. The decline was primarily driven by concerns over China’s economic slowdown.

Heavy losses in HDFC Bank shares dragged down Indian stock benchmarks, the Sensex and the Nifty 50, even as those of select heavyweights such as Reliance Industries and SBI underpinned them amid largely positive global cues on Friday, July 5. 

The benchmark equity indices ended Friday’s trading session in the mixed territory. The NSE Nifty 50 gained 21.70 points or 0.09% to settle at 24,323.10, while the BSE Sensex dipped 53.07 points or 0.07% to 79,996.60.

Commodities 

The Gold price rallied during the American session following the release of June’s US Nonfarm Payrolls (NFP) report, which exceeded forecasts, but two previous months’ downward revisions hinted that the labour market is cooling faster than the figures show.

XAU/USD traded as high as $2,391 and registered gains of over 1.40% in the day and more than 2.70% in the week after bouncing off daily lows of $2,349, sponsored in part by a weaker US Dollar, which remains undermined by lower US Treasury bond yields

Silver soared above the June 20 high of $30.78 on Friday and extended its gains past the $31.00 figure following a weak US jobs report that lifted expectations about a possible Fed interest rate cut. 

Forex 

The U.S. dollar fell sharply Friday following the jobs report. Treasury yields also dived. Here’s a round-up of the latest foreign exchange quotes for Friday:

EUR/USD: The euro showed renewed strength against dollar, with the exchange rate rising to 1.0840, an increase of 0.28 percent. This upward movement reflects positive economic data from the Eurozone and a weakening U.S. Dollar amid concerns over the Federal Reserve’s future monetary policy.

USD/JPY: The Japanese yen jumped to 160.71, an increase of 0.31 percent. The yen’s strength is attributed to safe-haven demand as investors remain cautious about global political uncertainties.

USD/CAD: The Canadian dollar cruised higher to 1.3632, an increase of 0.17 percent.

GBP/USD: The British Pound strengthened against the dollar, with the exchange rate increasing to 1.2813, up by 0.43 percent. The pound’s rise is driven by positive economic indicators from the UK and a weaker U.S. dollar combined with a change of government as a result of Thursday’s election.

USD/CHF: The Swiss franc advanced to 0.8956, a rise of 0.44 percent. The franc’s appreciation is due to its status as a safe-haven currency amid the global political volatility.

AUD/USD (Australian Dollar/US Dollar) The Australian dollar appreciated against the U.S. dollar, with the exchange rate climbing to 0.6750, up by 0.39 percent. The AUD/USD pair benefited from better-than-expected economic data from Australia and the weaker U.S. dollar.

NZD/USD: The New Zealand dollar strengthened against the greenback, with the exchange rate rising to 0.6145, an increase of 0.49 percent. The Kiwi’s gain is supported by strong economic performance in New Zealand and a broadly weaker U.S. Dollar.

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